A Start-Up’s R&D Stages and the Evolution of Financing Sources: Evidence from the Biotechnology Industry

  • Hyunsung D Kang
  • Entrepreneurship Research Journal, January 2018, De Gruyter
  • DOI: 10.1515/erj-2017-0159

A Start-Up’s R&D Stages and the Evolution of Financing Sources

What is it about?

The co-existence of angel, independent venture capital (IVC), and corporate venture capital (CVC) in the entrepreneurial finance market raises a natural question of why a start-up finances its projects from one source over another. This question becomes more complicated to address because a start-up grows or declines dynamically. Using a lifecycle theory of entrepreneurial finance, which suggests that a start-up uses several financing sources as it reaches certain thresholds in its life cycle accordingly, I explore this selection issue with my data set on 113 biopharmaceutical start-ups. I find that these start-ups tend to finance their projects mostly from solely IVCs or CVCs rather than angels and syndicated investors combining IVCs and CVCs when they have more preclinical and phase I products in their R&D pipelines; and from CVCs or syndicated investors rather than angels and IVCs when they do more phase II and phase III products.

Why is it important?

It is included in the abstract.


Hyunsung Kang
Berry College

It is included in the abstract.

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